Liberty Dollar was raided not too long ago, and according to the papers filed the FBI cited the reason as Americans are easily confused about whether RP Dollars could be mistaken for US Currency.

Pretty funny video.

The Street Video - Coverage of Liberty Dollar, Ron Paul Dollar, The FBI Thinks You Will Be Confused, Hahahahaha!

You have worked hard. Now Its time to work smart. Learn to Diversify Your Income.

The gold price has not only strengthened in U.S. dollar terms, but has in fact been appreciating in most currencies - an indication of increased investment demand. The following graph and table (not yet reflecting the post-Christmas rally) clearly illustrate this phenomenon.

Source: Plexus Asset Management (based on data from I-Net)

GOLD PRICE MOVEMENTS IN VARIOUS CURRENCIES

Gold price in various currencies 2005
2006
2007 (YTD: Dec 24, 2007)

Gold in US dollar 17.9%
23.1%
27.5%

Gold in euro 34.9%
10.5%
16.9%

Gold in British pound 31.3%
8.3%
26.4%

Gold in Swiss franc 35.9%
14.1%
21.1%

Gold in yen 35.5%
24.4%
22.5%

Gold in Aus Dollar 24.9%
13.9%
16.2%

Gold in Can Dollar 14.0%
23.5%
7.8%

Gold in rand 31.9%
37.1%
27.3%

Gold in renminbi 15.0%
19.1%
20.1%

Gold in rupee 22.7%
20.8%
13.7%

Gold in dinar 17.9%
23.2%
21.1%

Source: Plexus Asset Management (based on data from I-Net)

The pressing question is how sustainable bullion’s uptrend is. Although the technical picture indicates a primary bull market, the fundamental situation offers both bullish and bearish arguments.

The arguments in favor of a rising gold price have been well documented and include: the possibility of ongoing pressure on the U.S. dollar, increasing global inflationary expectations, a surging oil price, minimal new mine production, and the fact that central bank sales are capped through the Central Bank Gold Agreement (CBGA II).

The bears, on the other hand, point to: record long speculator positions that have in the past been strongly correlated with gold price corrections, potentially lower fabrication demand from India (as a result of the higher price), and a slowdown in producer de-hedging as the global hedge book diminishes. Additionally, a seasonally weak period is approaching from February to April, as is illustrated by the graph below.

Over the past few months I have often conveyed my bullish stance on gold bullion. Examples of these articles include: “Gold: forwards and upwards,” (September 14, 2007) and “Smart money bets on surging gold price,” (September 4, 2007). I see no reason to change this position, from both an absolute, and safe-haven point of view. I would, however, caution that one should not chase a surging gold price in an attempt to stock up on the various gold-related instruments. Instead, bide your time and wait for the short-term corrections that occur regularly, perhaps coinciding with the advent of seasonal weakness in a few weeks’ time.

The final word goes to George Bernard Shaw who said:

The most important thing about money is to maintain its stability… You have to choose between trusting the natural stability of gold and the honesty and intelligence of members of the government. With due respect for these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold.

http://seekingalpha.com/article/58512-gold-bullion-the-gift-that-keeps-on-giving

You have worked hard. Now Its time to work smart. Learn to Diversify Your Income.

By Christopher Swann and Kevin Carmichael

Dec. 28 (Bloomberg) — The dollar’s share of global foreign-exchange reserves fell to a record low in the third quarter as demand for U.S. assets waned after the subprime- mortgage market collapsed.

The dollar accounted for 63.8 percent of reserves at the end of September, down from 65 percent three months earlier, the International Monetary Fund said today in Washington. The euro’s share rose to 26.4 percent from 25.5 percent. IMF quarterly figures go back to 1999, the year the euro was introduced.

The figures suggest central banks diversified out of the dollar as it fell to the lowest level in a decade. Investors sold a record amount of U.S. securities in August when defaults on subprime mortgages rippled through financial markets and the Federal Reserve signaled it would cut interest rates.

“The dollar seems to be losing, at least to some small extent, its favored status,” said David Powell, a currency strategist at IDEAglobal in New York. “Foreign central banks aren’t necessarily shunning dollar assets, but they were more attracted to other currencies.”

China, Russia and other countries with trade surpluses or rising energy-export earnings are setting up so-called sovereign wealth funds to increase earnings on their reserves. Speculation also intensified in the third quarter that Saudi Arabia, United Arab Emirates and other Middle Eastern nations would follow Kuwait and end their currencies’ pegs to the dollar.

Total Reserves

Total foreign-exchange reserves increased in the third quarter to $6.04 trillion from $5.72 trillion at the end of June. The figures on currency allocations are based on a smaller total, $3.83 trillion last quarter, because not all central banks agree to identify the breakdown of their reserves.

The British pound’s share of foreign exchange reserves rose to 4.7 percent, from 4.6 percent in the second quarter and 4.2 percent in the third quarter of 2006. The yen’s third-quarter allocation dropped to 2.7 percent from 2.8 percent. The Japanese currency represented 3 percent of reserves a year earlier.

The dollar’s share has declined from 71.1 percent in March 1999, while the euro’s allocation has climbed from 18.1 percent.

While the dollar’s share of foreign exchange reserves is declining, the size of dollar holdings has continued to rise with the gains in total reserves.

The dollar amount climbed to $2.45 trillion in September from $2.08 trillion a year before. The value of euro holdings exceeded $1 trillion for the first time, rising to $1.01 trillion from $765 billion in the third quarter of 2006.

“Small movements in the dollar’s share are not very important,” said Brad Setser, a fellow at the Council on Foreign Relations in New York who used to work at the U.S. Treasury. “The real issue is that the amount of dollars held by central banks is rising dramatically.”

Dollar’s Decline

The Fed’s trade-weighted broad dollar index, a measure of the U.S. currency’s value against its counterparts from the biggest American trading partners, fell as low as 100.36 in September, the weakest since 1997. Since then, it reached a record low of 97.38 on Nov. 7.

International investors have reduced their holdings of U.S. stocks and bonds since the August credit collapse hammered the values of corporate bonds and securities tied to subprime mortgages. The losses spurred by rising U.S. mortgage defaults caused banks and securities firms worldwide to write off more than $80 billion.

Foreigners were net sellers of long-term U.S. financial assets in the third quarter, U.S. Treasury figures show. Monthly sales averaged $11.8 billion in the period, compared with average net purchases of $64 billion in the previous five years.

In August, when the credit rout sparked concern that banks would curtail lending, leading to a slump in spending that would send the U.S. into recession, foreigners sold a net $40.7 billion of American stocks.

Confidence in Dollar

Treasury Secretary Henry Paulson and Fed Chairman Ben S. Bernanke expressed confidence last month that the dollar will keep its mantle as the world’s top reserve currency.

“I don’t see any significant change in the broad holdings of dollars,” Bernanke said in answering questions at a Nov. 8 congressional hearing. The dollar “remains the dominant reserve asset and I expect that to continue to be the case,” he said.

Paulson defended the dollar in remarks to reporters on Nov. 9, at a time when it had fallen to a record low against the euro and Canadian dollar and the weakest versus Britain’s pound since 1981.

“The dollar has been the world’s reserve currency since World War II and there’s a reason,” said Paulson, a former Goldman Sachs Group Inc. chief executive officer. “I put the U.S. economy up against any in the world in terms of competitiveness — that’s a fact.”

The IMF calculates foreign exchange reserves in dollars, so the euro’s rise against the U.S. currency this year accounts for much of its growing share of central banks’ reserves, said Meg Browne, a currency strategist at Brown Brothers Harriman in New York and a former economist at the Federal Reserve.

“If you’re holding euros, and you don’t do anything, your euro holdings are still going to be valued at a higher level,” Browne said from New York. “Total U.S. dollar holdings continued to rise. It’s not apparent that central banks are diversifying out of dollars.”

Still, the value of euros held by central banks increased 8.6 percent in the third quarter from the second quarter, a period when the euro climbed 4.7 percent against the dollar, according to Powell. That suggests a “real” gain in euro holdings of about 3.9 percent, he said.

“The dollar diversification story is likely to stay alive through the course of 2008,” Powell said. “It’s not something that’s going to happen overnight. It’s a long-term negative for the dollar.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=aa0w9V8GRIBU&refer=home

You have worked hard. Now Its time to work smart. Learn to Diversify Your Income.

By Ambrose Evans-Pritchard, International Business Editor

Morgan Stanley has issued a full recession alert for the US economy, warning of a sharp slowdown in business investment and a “perfect storm” for consumers as the housing slump spreads.

In a report “Recession Coming” released today, the bank’s US team said the credit crunch had started to inflict serious damage on US companies.

“Slipping sales and tightening credit are pushing companies into liquidation mode, especially in motor vehicles,” it said.

“Three-month dollar Libor spreads have jumped by 60 to 80 basis points over the last month. High yield spreads have widened even more significantly. The absolute cost of borrowing is higher than in June.”

“As delinquencies and defaults soar, lenders are tightening credit for commercial, credit card and auto lending, as well as for all mortgage borrowers,” said the report, written by the bank’s chief US economist Dick Berner. He said the foreclosure rate on residential mortgages had reached a 19-year high of 5.59pc in the third quarter while the glut of unsold properties would lead to a 40pc crash in housing construction.

“We think overall housing starts will run below one million units in each of the next two years — a level not seen in the history of the modern data since 1959,” he said.

Although the US job market has apparently held up well, an average monthly fall of 138,000 in the number of self-employed workers over the last quarter suggests it may now be buckling. “Consumers face what could be a perfect storm,” said Mr Berner.

The partial freeze on subprime mortgage rates announced last week by US treasury secretary Hank Paulson may help cushion the blow for some banks, but it could equally backfire by adding a “risk premium” that drives even more lenders out of the mortgage market.

Like Goldman Sachs, and Lehman Brothers, the bank no longer believes Asia and Europe will come to the rescue as America slows.

It has slashed its 2008 growth forecast for Japan from 1.9pc to 0.9pc, and warned that credit stress will weigh heavily on the eurozone.

Mr Berner said US demand is likely to contract by 1pc each quarter for the first nine months of 2008, but the picture could be far worse if the Federal Reserve fails to slash rates fast enough. It is betting on a quarter point cut this week, with three more cuts by the middle of next year. “We expect the Fed to insure against the worst outcome,” he said.

Like Goldman Sachs, and Lehman Brothers, the bank no longer believes Asia and Europe will come to the rescue as America slows.

It has slashed its 2008 growth forecast for Japan from 1.9pc to 0.9pc, and warned that credit stress will weigh heavily on the eurozone.

Mr Berner said US demand is likely to contract by 1pc each quarter for the first nine months of 2008, but the picture could be far worse if the Federal Reserve fails to slash rates fast enough. It is betting on a quarter point cut this week, with three more cuts by the middle of next year. “We expect the Fed to insure against the worst outcome,” he said.

Like Goldman Sachs, and Lehman Brothers, the bank no longer believes Asia and Europe will come to the rescue as America slows.

It has slashed its 2008 growth forecast for Japan from 1.9pc to 0.9pc, and warned that credit stress will weigh heavily on the eurozone.

Mr Berner said US demand is likely to contract by 1pc each quarter for the first nine months of 2008, but the picture could be far worse if the Federal Reserve fails to slash rates fast enough. It is betting on a quarter point cut this week, with three more cuts by the middle of next year. “We expect the Fed to insure against the worst outcome,” he said.

Morgan Stanley is the first major Wall Street bank to warn that it is may now be too late to stop a recession, though most have shifted to an ultra-cautious stance in recent weeks.

The bank at first treated the August crunch as a “mid-cycle correction”, much like the financial storm after Russia’s default in 1998. But the collapse of the US commercial paper market has now continued for seventeen weeks, suggesting a “fundamental deleveraging of the banking system.”

Mr Berner - known at Morgan Stanley as the “resident bull”- is one of the most closely watched analysts on Wall Street. While he began to turn bearish last April as the credit markets turned nasty, the latest report is written in tones that may is rattle the fast-diminishing band of optimists.

http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=A1YourView&xml=/money/2007/12/11/cnusa111.xml

You have worked hard. Now Its time to work smart. Learn to Diversify Your Income.

By Joanne Morrison

WASHINGTON (Reuters) - Retail sales were solid in November as the holiday shopping season got underway, but a good portion of consumer dollars went to higher-priced gasoline, which also pushed wholesale inflation up by the largest amount in 34 years.

The Commerce Department said on Thursday that retail sales rose 1.2 percent in November, twice the increase Wall Street economists were expecting and a bright sign that consumers, who fuel two-thirds of economic growth, are still hanging in as the economy wades through credit and housing market turmoil.

“These numbers should put some of the fears to rest that consumers are going to stay at home this holiday season. That’s absolutely not going to happen,” said Mark Vitner, an economist at Wachovia Securities in Charlotte, North Carolina.

Separately, the Labor Department said its producer price index, a gauge of prices received by farms, factories and refineries, shot up 3.2 percent as gasoline prices surged a record 34.8 percent.

That was the biggest monthly increase since August 1973 and was well ahead of analysts’ expectations of a 1.5 percent gain.

The combination of higher inflation and a stronger-than-expected consumer sector weighed on prices of U.S. government debt as traders saw it diminishing chances of further interest rate cuts from the Federal Reserve.

U.S. stocks fell on Thursday as doubts grew about a plan unveiled on Wednesday by global central banks to unfreeze credit markets hit hard by the prolonged housing slump and related subprime mortgage disaster.

Excluding food and energy, so-called core inflation pressures were still evident. The index rose twice as much as expected and by the biggest amount since February.

“Today’s report underscores the violence of the latest energy price shock and the need for the Fed to be vigilant for any resulting pass-through to core consumer prices as we move into 2008,” said Kenneth Beauchemin, economist at Global Insight.

A separate report from the Commerce Department of a buildup in retail inventories of building materials and home furnishings also showed the impact of the housing slump.

In October, stocks of building materials and garden equipment and supplies rose 1.1 percent while inventories at furniture, home furnishing, electrical supply and appliance stores gained the most since October of 2003.

GASOLINE PRICES SURGE

Although the retail sales report showed steady spending across the board, higher gasoline prices helped boost the overall sales picture.

Gasoline station sales climbed 6.8 percent, the largest gain since September 2005 in the wake of Hurricane Katrina. They were 25 percent above year-ago levels.

“There’s a question as to how much of the gain is pure inflation,” said Pierre Ellis, senior economist at Decision Economics in New York. “Still, real consumer spending growth is likely to be much firmer than generally thought.

“The economy is not slipping into crisis, but the outlook is still cloudy,” he added.

U.S. retailers had been pleasantly surprised as the holiday shopping season got underway late last month, considering the high gasoline prices households were facing and the deep slump in the housing sector.

The housing slump is expected to slow the U.S. economy in the fourth quarter and the start of next year, with some fearing a recession. But a great deal depends on whether U.S. consumers continue to hold up.

In fact, so-called core retail sales, which strip out cars, gasoline and building materials, were up 1.1 percent, compared with a 0.2 percent gain in October.

Purchases of motor vehicles and parts, which make up around one-fifth of total sales, fell 1 percent last month, the Commerce Department data showed.

(Additional reporting by Alister Bull, Mark Felsenthal and Nancy Waitz; writing by Tim Ahmann and Joanne Morrison; Editing by Dan Grebler)

http://news.yahoo.com/s/nm/20071213/bs_nm/usa_economy_dc_3

You have worked hard. Now Its time to work smart. Learn to Diversify Your Income.